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Steven Alan Magritz
C/o Notary, P.O. Box 342443
Milwaukee, Wisconsin 53234
district court of the united states District of Columbia
_____________________________________________________________________________
Steven Alan Magritz, Complainant
Against
Ozaukee County, a public corporation, etc., et al.
Respondents.
_____________________________________________________________________________
MEMORANDUM OF LAW
IN SUPPORT OF
VERIFIED COMPLAINT FOR: DECLARATORY JUDGMENT;
IMPOSITION OF A CONSTRUCTIVE TRUST; AN ACCOUNTING;
BREACH OF FIDUCIARY DUTY BY PUBLIC OFFICERS /
BREACH OF THE PUBLIC TRUST; QUO WARRANTO; AND, REVOCATION
OF CORPORATE CHARTER
_________________________________________________________________
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INTRODUCTION
The individual Respondents are public officers and as such are fiduciaries of the
Public Trust(s) created by the Constitution of the United States of America and the
Constitution of The state of Wisconsin. As fiduciaries of the Public Trust, public officers
owe loyalty to the Constitutions which created the Public Trust(s) and are required to bebound by oath to said Constitutions. Respondents have a fiduciary duty to display honesty,
integrity, and good faith to the beneficiaries of the public trust(s), who are the sovereign
people they serve. As fiduciaries of the Public Trust, Public Officers must at all times,
without exception, display honesty, integrity, and good faith toward the beneficiaries.
Fiduciaries have the duty to bear the utmost fidelity to the Public Trusts created by
the Constitutions that were created, ordained, and established by the people, who are the
grantors and the beneficiaries of the Public Trust. The limitations placed upon the actions
of the fiduciaries by the Trust Instruments, the Constitutions, are absolute. These
limitations include, but are not limited to:
a. The prohibition against impairing the obligation of contracts,
b. The prohibition against the taking of private property for public use without
just compensation, and,
c. In general, the prohibition against trespass of another mans rights, liberty, or
property.
Fiduciaries who, by acts of commission or omission, impair the obligations of
contracts, especially contracts between the people and the United States of America,
denigrate the good name of the state, instill reproach among the people for all men who
occupy public office, are disloyal to the Constitutions, act dishonestly, lack integrity, act in
bad faith, and are in breach of their fiduciary duty.
Fiduciaries who, by acts of commission or omission, take private property for public
use without just compensation, denigrate the good name of the state, instill reproach
among the people for all men who occupy public office, are disloyal to the Constitutions,
act dishonestly, lack integrity, act in bad faith, and are in breach of their fiduciary duty.
Fiduciaries have a duty of full disclosure to beneficiaries. To conceal, or fail to
disclose, that corporate statutes do not apply to the people in their private capacity
exercising inherent rights is deceit, dishonesty, bad faith, and a breach of fiduciary duty.
To conceal, or fail to disclose, that registration of private property with the corporate State,
such as registering a private automobile or recording a deed to private land, presumptively
grants the corporate State control over the private property is deceit, dishonesty, bad faith,
and a breach of fiduciary duty.
To conceal, or fail to disclose, that registering or recording private property withthe corporate State creates an hypothecation to the corporate State of the private property
which the corporate State then uses to make profits therefrom, such as using the private
property as collateral for the issuance of bonds, the proceeds of which run the
corporations operations, is deceit, dishonesty, bad faith, and breach of fiduciary duty.
To conceal, or fail to disclose, that registration of private property with the
corporate State, such as registering a private automobile or recording a deed to private
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land, is voluntary, and threatening to penalize those who fail to volunteer is deceit,
dishonesty, bad faith, and a breach of fiduciary duty.
To require private men and women exercising inherent property rights to register
or record their private property with the corporate State, and then requiring them to pay
for the privilege of the registration or recordation is extortion, deceit, dishonesty, bad
faith, and a breach of fiduciary duty.To require those exercising inherent property rights to register or record their
private property with the corporate State, and then not paying said persons, i.e.,
beneficiaries of the Public Trust, the income or profits generated from said hypothecated
private property is theft or stealing, deceit, dishonesty, bad faith, and a breach of fiduciary
duty.
To impose, or attempt to impose, penal statutes of the corporate body politic against
a private man exercising inherent rights who is not a member of the corporate body politic,
especially when said imposition or attempt to impose is politically motivated or retaliatory
against a victim and witness of crime, is misconduct in public office, deceit, dishonesty, bad
faith, a criminal act, and breach of fiduciary duty.Acts in breach of fiduciary duty by public officers give rise to personal liability of
the public officer(s). Acts of public officers, fiduciaries, which unjustly enrich said officers
or a third party give rise to a constructive trust in favor of the beneficiaries or cestui que
trust for restoration and restitution. Acts in breach of fiduciary duty are cause for
removal from office. Further, pursuant to Section 4 of the 14th
Amendment, assumption or
payment of any debt, obligation, or claim, such as wages or pensions, by any State to a
fiduciary in insurrection or rebellion against the Constitution is illegal and void.
I. Individual Respondents Are Public Officers
Individual Respondents named in Complainants Complaint are public officers.
[O]ne who holds a public office is a public officer.63C Am. Jur. 2d Public Officers and Employees 9 (Online Edition November 2011).
Murach v. Planning and Zoning Com'n of City of New London, 196 Conn. 192, 491 A.2d 1058(1985); Raduszewski v. Superior Court In and For New Castle County, 232 A.2d 95 (Del. 1967);State ex inf. McKittrick v. Whittle, 333 Mo. 705, 63 S.W.2d 100, 88 A.L.R. 1099 (1933); Vance S.
Harrington & Co. v. Renner, 236 N.C. 321, 72 S.E.2d 838 (1952).
A member of the General Assembly is, of course, a public officer within the meaning
of the Constitution. Certainly, where an individual has been appointed or elected, in a manner
prescribed by law, has a designation or title given him by law, and exercises functions
concerning the public, assigned to him by law, he must be regarded as a public officer.
(citations omitted): An office is a public station or employment conferred by the appointment of
the government. And any man is a public officer who is appointed by government, and has
any duty to perform concerning the public; nor is he any the less a public officer because
his authority or duty is confined to narrow limits.
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When our Constitution declares that [p]ublic officers are the trustees and servants of the
people, we interpret that declaration to mean that public officers are the trustees and servants
of the people.
All public officers, within whatever branch and at whatever level of our government,
and whatever be their private vocations, are trustees of the people, and do accordingly labor
under every disability and prohibition imposed by law upon trustees relative to the making ofpersonal financial gain from the discharge of their trusts.
Nor are the proscriptions of the law confined to legislators who are lawyers. They extend
to every public officer.
Georgia Dept. of Human Resources v. Sistrunk, 249 Ga. 543, 546-547, 291 S.E.2d 524, 528 (1982).
II. Individual Respondents, As Such Public Officers, Are Fiduciaries
Individual Respondents named in Complainants Complaint are public officers and
as such are defined as fiduciaries.
Fiduciary includes a trustee under any trust, [a] public officerUniform Fiduciaries Act, Section 1. www.law.upenn.edu/bll/archives/ulc/fnact99/1920_69/ufa22.pdf
Fiduciary includes a trustee under any trust, [a] public officerWisconsin Statutes 112.01(b).
Register of deeds was fiduciary under Wisconsin law, for purpose of determining
dischargeability of debt arising from misappropriation of collected fees, where Wisconsin
statutory definition specifically included public officer[s], plain meaning of statute seemed to
include any public officer. Matter of Loken, 32 B.R. 205, Bkrtcy.Wis.,1983.
a public officer, in holding a position of public trust, stands in a fiduciary
relationship to the citizens that he or she has been elected to serve.(See Trist v. Child, 88 U.S. (21 Wall.) 441, 450, 22 L.Ed. 623 (1874).) Felkner v. Chariho
Regional School Committee, 968 A.2d 865, 874, R.I., 2009.
It should not be forgotten that a public office is a public trust, and all public officers
should so conduct their official duties as to be like Caesar's wife, above suspicion of
irregularities in the administration of their offices, even though such irregularities may not, under
the law, constitute such wilful misconduct, corruption, or maladministration as to merit removal
from office.' Parsons v. Steingut, 185 Misc. 323, 327, 57 N.Y.S.2d 663, 666 (1945).
The statute is unique because only public officials can violate its provisions. These
officials are held in public trust and owe a fiduciary duty to the people they represent. The
high standard of conduct demanded of public officers, coupled with the broad sweeping language
of the statute, permits no other interpretation as to its intent and meaning.
People v. Savaiano, 66 Ill.2d 7, 15, 359 N.E.2d 475, 480 (1976).
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Syllabus by the Court:
1. The sheriff as the chief peace officer of his county is responsible both by common and
statutory law to keep and conserve peace and good order within his county.
2. Neglect of official duty may consist of careless or intentional failure to exercise reasonable
diligence in its performance.
3. Duties imposed upon a public officer are functions and attributes of the office to beperformed by the incumbent.
4. A sheriff's official duty implies alertness and initiative to enforce the laws enacted by the
people for their protection and well-being. Relator, who failed to meet these requirements, held
properly removed from office.
A public office is a public trust. Such offices are created for the benefit of the public,
not for the benefit of the incumbent. In re Olson, 211 Minn. 114, 118, 300 N.W. 398, 400 (1941).
One is said to act in a fiduciary capacity or to receive money or contract a debt in a
fiduciary capacity, when the business which he transacts, or the money or property which he
handles, is not his own or for his own benefit, but for the benefit of another person, as to whichhe stands in a relations implying and necessitating great confidence and trust on the one part and
a high degree of good faith on the other part. The term is not restricted to technical or express
trusts, but includes such offices or relations as those of an attorney at law, a guardian, executor,
or broker, a director of a corporation, and a public officer. (Emphasis added)Ducote Jax Holdings, L.L.C. v. Bradley, 2007 WL 2008505 (E.D.La.), (citing State of Louisianav. Hagerty, 205 So.2d 369, 374-75 (La.1967) (internal citations omitted).
III. Individual Respondent Public Officers Are Fiduciaries of the Public Trust
Individual Respondents named in Complainants Complaint are public officers, as such
are defined as fiduciaries, and are fiduciaries of the Public Trust, and must observe the
utmost loyalty to the Constitutions that created or erected the Public Trust(s).
This Constitution, and the Laws of the United States which shall be made in Pursuance
thereof; and all Treaties made, or which shall be made, under the Authority of the United States,
shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby,
any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.
The Senators and Representatives before mentioned, and the Members of the several
State Legislatures, and all executive and judicial Officers, both of the United States and of theseveral States, shall be bound by Oath or Affirmation, to support this Constitution; but no
religious Test shall ever be required as a Qualification to any Office or public Trust under the
United States. The Constitution for the United States of America, Article VI.
Members of the legislature, and all officers, executive and judicial, except such inferior
officers as may be by law exempted, shall before they enter upon the duties of their respective
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offices, take and subscribe an oath or affirmation to support the constitution of the United
States and the constitution of the state of Wisconsin, and faithfully to discharge the duties of
their respective offices to the best of their ability.The Constitution of The state of Wisconsin, Article IV, Section 28.
The legislature hereby reaffirms that a state public official holds his or her position as apublic trust. Wisconsin statutes 19.45(1).
Public service is a public trust, requiring employees to place loyalty to the
Constitution, the laws and ethical principles above private gain.5 USC Sec. 7301, Section 101. (a), Part I, Ex. Ord. No. 12731, Oct. 17, 1990, 55 F.R. 42547.
The fundamental principle of supremacy of law, the crux of our constitutional
government, requires that all public officials obey the mandates of the Constitution and the
lawful enactments of the Congress. See U.S.Const. art. VI; United States v. Lee, 106 U.S. 196,
1 S.Ct. 240, 27 L.Ed. 171 (1882).[FN2]FN2. In the Lee case, the son of General Robert E. Lee sued successfully for the recovery of
property of the Lee family against the commandant of Fort Myer and the superintendent of the
national cemetery at Arlington. Mr. Justice Miller proclaimed the principle of supremacy of law
in the following imperishable language: No man in this country is so high that he is above
the law. No officer of the law may set that law at defiance with impunity. All the officers of
the government, from the highest to the lowest, are creatures of the law and are bound to
obey it. It is the only supreme power in our system of government . . . . Courts of justice are
established, not only to decide upon the controverted rights of the citizens as against each other,
but also upon rights in controversy between them and the government ... .106 U.S. at 220, 1 S.Ct. at 261. C.B.S. Imports Corp. v. U. S., 450 F.Supp. 724, 728 (1978).
The foundation of a republic is the virtue of its citizens. They are at once sovereigns and
subjects. As the foundation is undermined, the structure is weakened. When it is destroyed, the
fabric must fall. Such is the voice of universal history. The theory of our government is, that all
public stations are trusts, and that those clothed with them are to be animated in the
discharge of their duties solely by considerations of right, justice, and the public good. They
are never to descend to a lower plane. . No people can have any higher public interest,
except the preservation of their liberties, than integrity in the administration of their government
in all its departments. Trist v. Child, 88 U.S. 441, 450 (1874).
The members of the board of chosen freeholders and of the bridge commission arepublic officers holding positions of public trust. They stand in a fiduciary relationship to
the people whom they have been elected or appointed to serve.Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 474, 86 A.2d 201, (1951), citing: Rankin v.Board of Education, 135 N.J.L. 299, 303, 51 A.2d 194 (E. & A.1947); Trist (Burke) v. Child, 21Wall. 441, 88 U.S. 441, 450, 22 L.Ed. 623, 625 (1875); Edwards v. City of Goldsboro, 141 N.C.60, 53 S.E. 652, 653, 4 L.R.A.,N.S., 589 (Sup.1906); Tuscan v. Smith, 130 Me. 36, 153 A. 289,294, 73 A.L.R. 1344 (Sup.Jud.1931); State ex rel. Fletcher v. Naumann, 213 Iowa 418; 239 N.W.
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93, 99, 81 A.L.R. 483 (Sup.1931); In re Marshall, 363 Pa. 326, 69 A.2d 619, 625 (Sup.1949); 42Am.Jur., Public Officers, s 8, p. 885; 43 Id. s 260, p. 77-78; 67 C.J.S., Officers, s 6, p. 118.
A public office is a public trust. Borough councilmen, as fiduciaries and trustees of
the public interest, must serve that interest with the highest fidelity. The law tolerates no
mingling of self interest; it demands exclusive loyalty. (citations omitted). The theory is that apublic officer assumes the same fiduciary relationship toward the citizens of his community
as a trustee bears to his Cestui que trust. (citations omitted). They have the right to expect
that in everything that appertains to their business or welfare, he will exercise his best judgment,
unaffected and undiluted by anything which might inure to his own interest as an individual.Aldom v. Borough of Roseland, 42 N.J.Super. 495, 501, 127 A.2d 190, 193 (1957).
Public officers hold positions of public trust, and stand in a fiduciary relationship to
the people whom they have been appointed to serve.State v. Markt, 156 N.J.Super. 486, 384 A.2d 162, 166 (N.J.Super.Ct.App.Div.1978) (citing
Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 86 A.2d 201, 221 (N.J.1952)).
They must serve the public with the highest fidelity. Id.
The citizen is not at the mercy of his servants holding positions of public trust nor is he
helpless to secure relief from their machinations except through the medium of the ballot, the
pressure of public opinion or criminal prosecution. Driscoll, 86 A.2d at 222. Whenever the acts
ofpublic officers fail to conform to the standard imposed by the fiduciary relationship in which
they stand to the public, relief will be available in the civil courts.
Id. Marjac, L.L.C. v. Trenk, D.N.J., 2009 WL 2143686.
The theory of our government is, that all public stations are trusts, and that those
clothed with them are to be animated in the discharge of their duties solely by considerations ofright, justice, and the public good. They are neverto descend to a lower plane.
Trist v. Child, 88 U.S. 441, 450, 1874.
Of course, a public office is a public trust:Constitution of Pennsylvania, Article VI, Section 3; Taylor v. Beckman (No.1), 178 U.S.548, 577, 20 S.Ct. 1009, 44 L.Ed. 1187; Commonwealth v. Gamble, 62 Pa. 343, 349, 1 Am.Rep.422; Commonwealth v. Kirk, 141 Pa.Super. 123, 145-146, 14 A.2d 914;
and the occupant of such an office is a fiduciary. Like any other fiduciary or trustee, he is
required to exercise common skill and prudence, and when his conduct of the trust is not marked
by these qualities, there is mismanagement. In re Marshall, 363 Pa. 326, 336, 69 A.2d 619, 625.
Jersey Ci ty v. H ague:
In Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, at page 474 et seq., (1952), this court
said without dissent:
The members of the board of chosen freeholders and of the bridge commission are
public officers holding positions of public trust. They stand in a fiduciary relationship to
the people whom they have been elected or appointed to serve. (citations omitted); 42
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Am.Jur., Public Officers, s 8, p. 885; 43 Id. s 260, p. 77-78; 67 C.J.S., Officers, s 6, p. 118. As
fiduciaries and trustees of the public weal they are under an inescapable obligation to serve
the public with the highest fidelity. In discharging the duties of their office they are required to
display such intelligence and skill as they are capable of, to be diligent and conscientious, to
exercise their discretion not arbitrarily but reasonably, and above all to display good faith,
honesty and integrity. (citations omitted); 43 Am.Jur., Public Officers, ss 260-261, pp. 77-78;43 Id. s 267, p. 82; 67 C.J.S., Officers, s 114, p. 402. They must be impervious to corrupting
influences and they must transact their business frankly and openly in the light of public scrutiny
so that the public may know and be able to judge them and their work fairly. When public
officials do not so conduct themselves and discharge their duties, their actions are inimicable
to and inconsistent with the public interest, and not only are they individually deserving of
censure and reproach but the transactions which they have entered into are contrary to
public policy, illegal and should be set aside to the fullest extent possible consistent with
protecting the rights of innocent parties. (citations omitted); 43 Am.Jur., Public Officers, s
291, p. 101.
These obligations are not mere theoretical concepts or idealistic abstractions of nopractical force and effect; they are obligations imposed by the common law on public officers
and assumed by them as a matter of law upon their entering public office. The enforcement of
these obligations is essential to the soundness and efficiency of our government, which exists
for the benefit of the people who are its sovereign. Constitution of 1947, art. I, part. 2. The
citizen is not at the mercy of his servants holding positions of public trust nor is he helpless to
secure relief from their machinations except through the medium of the ballot, the pressure of
public opinion or criminal prosecution. He may secure relief in the civil courts either through an
action brought in his own name, (citations omitted), or through proceedings instituted on his
behalf by the Governor, Constitution of 1947, art. V, sec. I, par. 11, or by the Attorney General,
(citation omitted). Under the former practice the great prerogative writs, especially Certiorari,were generally available to the aggrieved citizen, but by art. VI, sec. V, par. 4 of the Constitution
of 1947 the relief theretofore granted in such matters as a matter of judicial discretion became a
matter of right, see (citation omitted). Nonfeasance, misfeasance, malfeasance and corruption
in public office cannot prevail against an aroused citizenry who have it in their power to
end the misconception of some public officials that their obligations are fully met so long as
they obey the letter of the law and avoid its penal sanctions. That the shortcomings of some
public officers may not make them accountable in our criminal courts does not mean that their
nefarious acts cannot successfully be attacked through the processes of the civil law. * * * It is
the potential for evil and not the actual financial loss or other injury incurred that renders a
transaction illegal because of an abuse of discretion, (citations omitted)Manifestly the instant case falls within the pattern of the Driscoll case.
Restitution was likewise invoked in such cases as United States v. Carter, 217 U.S. 286,
(1910), where the defendant, an army officer in charge of procurement, entered into an
arrangement with two contractors by which he exercised his official discretion in such a way as
to give them more contracts and more profits. The court traced his share in this enterprise into
the hands of other defendants, who were not purchasers in good faith, and subjected the money
to a constructive trust, saying:
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It would be a dangerous precedent to lay down as law that unless some affirmative fraud
or loss can be shown, the agent may hold on to any secret benefit he may be able to make out of
his agency. The larger interests of public justice will not tolerate, under any circumstances, that a
public official shall retain any profit or advantage which he may realize through the acquirement
of an interest in conflict with his fidelity as an agent. If he takes any gift, gratuity, or benefit in
violation of his duty, or acquires any interest adverse to his principal, without a full disclosure, itis a betrayal of his trust and a breach of confidence, and he must account to his principal for all
he has received.
The doctrine is well established and has been applied in many relations of agency or
trust. The disability results not from the subject-matter, but from the fiduciary character of the
one against whom it is applied. It is founded on reason and the nature of the relation, and is of
paramount importance. It is of no moment, said Lord Thurlow, in The York Bldgs. Co. v.
Mackenzie, 3 Paton, 378, what the particular name or description, whether of character or office,
situation or position, is, on which the disability attaches. United States v. Carter, supra, 217
U.S. at page 306.
The other Massachusetts case, City of Boston v. Dolan, 298 Mass. 346, 10 N.E.2d 275, 277,281 (Sup.Jud.Ct.1937), is to the same effect:
But as city treasurer the defendant was a fiduciary. As such he could be compelled to account in
equity like a trustee, regardless of a possible remedy at law, and could not be permitted to retain
a secret profit made in transactions conducted for the city. The saying, Public office is a public
trust, is more than mere rhetoric. (citations omitted)
Lord Porter also based the case on the additional ground of a fiduciary relationship:
As to the assertion that there must be a fiduciary relationship, the existence of such
a connection is, in my opinion, not an additional necessity in order to substantiate the
claim, but another ground for succeeding where a claim for money had and received would
fail. In any case, I agree with Asquith, L.J., in thinking that the words fiduciary relationship inthis setting are used in a wide and loose sense and include, Inter alios, a case where the servant
gains from his employment a position of authority which enables him to obtain the sum which he
receives.' (p. 620)
This view of the law is borne out by the American Law Institute Restatement on
Restitution:
Section 190, General Rule: Where a person in a fiduciary relation to another
acquires property, and the acquisition or retention of the property is in violation of his
duty as a fiduciary, he holds it upon a constructive trust for the other.
As these decisions and the Restatement show, the development of the principle of
restitution, both at law and in equity, as a remedy for breach by a public official of his fiduciaryobligations has obviously been salutary. Restitution, by virtue of its adaptability to individual
cases on equitable principles may, as we have seen, reach situations beyond the grasp of other
civil or criminal remedies and do justice on equitable principles; see (citation omitted) where
various alternatives were weighed with a view to working out justice so far as possible to all
concerned, but always on the fundamental basis of preventing the unfaithful public official or
public body profiting from his or its wrongdoing. See 65 Harv.L.Rev. 502 (1952); Lenhoff, the
Constructive Trust as a Remedy for Corruption in Public Life, 54 Col.L.Rev. 214 (1954).
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END of citations from: Jersey City v. Hague, 18 N.J. 584, 593-596, 115 A.2d 8, 13-15 (1955).
The courts of this State are committed to the principle that public officials hold positions
of public trust; they are under an inescapable obligation to serve the public with the highest
fidelity, good faith, and integrity. (citations omitted). Such required conduct demands
undivided loyalty and compels public officers to refrain from outside activities which interferewith proper discharge of their duties, or which may expose them to the temptation of acting in
any manner other than in the best interests of the public. .
These principles are imposed by law on all public officers and become effective upon their
entering public office. If it be determined that such a conflict of interest exists, their agreements
are against public policy and may be declared void; and this is so even though there is no proof
of fraud, dishonesty, loss to the public or whether in fact they were influenced by their personal
interest. Newton v. Demas, 107 N.J.Super. 346, 349, 258 A.2d 376, 378 (1969).
IV. Individual Respondent Public Officers Have Fiduciary Liabilities
Individual Respondents named in Complainants Complaint are public officers, as
such are defined as fiduciaries, and are fiduciaries of the Public Trust, and as fiduciaries
assume greater liabilities upon themselves than do other persons. Public officers are
required to serve with the highest fidelity and to display good faith, honesty and integrity
toward beneficiaries of the Public Trust. Public officers are subject to compensatory and
punitive damages for breach of fiduciary duty.
A. In General
In Pressley v. Township of Hillsborough, 37 N.J.Super. 486, 117 A.2d 646 (N.J.Super.Ct.
App.Div.1955), the Appellate Division set forth the duty owed by a public official:
As fiduciaries and trustees of the public weal they (municipal 3 officers) are under an
inescapable obligation to serve the public with the highest fidelity. In discharging the duties of
their office they are required to display such intelligence and skill as they are capable of, to be
diligent and conscientious, to exercise their discretion not arbitrarily but reasonably, and above
all to display good faith, honesty and integrity. Under New Jersey law, breach of fiduciary
duty is a tort claim requiring a showing of duty, breach, injury, and causation.Marjac, L.L.C. v. Trenk, D.N.J., 2009 WL 2143686.
As fiduciaries and trustees of the public weal they are under an inescapable obligationto serve the public with the highest fidelity. In discharging the duties of their office they are
required to display such intelligence and skill as they are capable of, to be diligent and
conscientious, to exercise their discretion not arbitrarily but reasonably, and above all to good
faith, honesty and integrity. citing:City of Newark v. N.J. Turnpike Authority, 7 N.J. 377, 381-382, 81 A.2d 705 (1951); Ryan v.
Paterson, 66 N.J.L. 533, 535-536, 49 A. 587 (Sup.Ct.1901); Schefbauer v. Board of TownshipCommittee of Kearney, 57 N.J.L. 588, 601, 31 A. 454 (Sup.Ct.1895); Ames v. Board of Education
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of Montclair, 97 N.J.Eq. 60, 65, 127 A. 95 (Ch. 1925); United States v. Thomas, 15 Wall. 337, 82U.S. 337, 342, 21 L.Ed. 89, 91 (1873); Paschall v. Passmore, 15 Pa. 295, 304 (Sup.1850);
Inhabitants of Cumberland County v. Pennell, 69 Me. 357, 365, 31 Am.Rep. 284 (Sup.Jud.1879);Speyer v. School Dist. No. 1, 82 Colo. 534, 261 P. 859, 860, 57 A.L.R. 203 (Sup.1927); 43
Am.Jur., Public Officers, ss 260-261, pp. 77-78; 43 Id. s 267, p. 82; 67 C.J.S., Officers, s 114, p.402. Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 475, 86 A.2d 201, (1951).
They must be impervious to corrupting influences and they must transact their business
frankly and openly in the light of public scrutiny so that the public may know and be able to
judge them and their work fairly. When public officials do not so conduct themselves and
discharge their duties, their actions are inimicable to and inconsistent with the public interest,
and not only are they individually deserving of censure and reproach but the transactions
which they have entered into are contrary to public policy, illegal and should be set aside to
the fullest extent possible consistent with protecting the rights of innocent parties. citing:Brooks v. Cooper, 50 N.J.Eq. 761, 26 A. 978, 21 L.R.A. 617 (E. & A. 1893); Cameron v.
International, & c., Union No. 384, 118 N.J.Eq. 11, 176 A. 692, 97 A.L.R. 594 (E. & A.1935);Girard Trust Co. v. Schmitz, 129 N.J.Eq. 444, 20 A.2d 21 (Ch.1941); Allen v. Commercial
Casualty Insurance Co., 131 N.J.L. 475, 477-478, 37 A.2d 37, 154 A.L.R. 834 (E. s A.1944);Stone v. William Steinen Mfg. Co., 133 N.J.L. 593, 595, 45 A.2d 486 (E. & A.1946); Pan
American Petroleum & Transport Co. v. United States, 273 U.S. 456, 500, 47 S.Ct. 416, 71 L.Ed.
734, 745 (1927); Mammoth Oil Co. v. United States, 275 U.S. 13, 48 S.Ct. 1, 72 L.Ed. 137(1927); Edwards v. City of Goldsboro, supra, 141 N.C. 60, 53 S.E. 625, 4 L.R.A.,N.S., 589
(Sup.1906); Tuscan v. Smith, supra, 130 Me. 36, 153 A. 289, 73 A.L.R. 1344 (Sup.Jud.1931); 43Am.Jur., Public Officers, s 291, p. 101. Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433,
475, 86 A.2d 201, 221, (1951).
A person may act in his own right from any motive if his act is lawful, but a public
officer must act without malice or at least must in good faith pursue a right purpose.
The authorities are numerous: citing: Jones v. Cody, 132 Mich. 13, 92 N. W. 495, 62 L. R. A.160; Lamb v. Redding, 234 Pa. 481, 83 A. 362; Moore v. Porterfield, 113 Okl. 234, 241 P. 346;Yealy v. Fink, 43 Pa. 212, 82 Am. Dec. 556; Dinsman v. Wilkes, 12 How. 390, 13 L. Ed. 1036;Wall v. McNamara, cited and quoted in Johnstone v. Sutton, 1 T. R. 493, 536; Black v. Linn, 17 S.D. 335, 96 N. W. 697, citing many cases; State v. Thornton, 136 N. C. 610, 48 S. E. 602; Kansas
City v. Hyde, 196 Mo. 498, 96 S. W. 201; Fertich v. Michener, 111 Ind. 472, 486, 11 N. E. 605,60 Am. Rep. 709. See, also, Smith v. Board, 10 Colo. 17, 13 P. 917. Speyer v. School Dist. No. 1,City and County of Denver, 82 Colo. 534, 261 P. 859, 861, 57 A.L.R. 203 (1927).
It is unnecessary to discourse on the duties of public officials. Their obligations as
trustees for the public are established as a part of the common law, fixed by the habits and
customs of the people. Contracts made in violation of those duties are against public policy,are unenforceable, and will be canceled by a court of equity.
Tuscan v. Smith, 130 Me. 36, 153 A. 289, 73 A.L.R. 1344 (1931).
[I]f the law claimed to have been violated was clearly established, the qualified
immunity defense ordinarily fails, since a reasonably competent public official should know
the law governing his conduct. Bearden v. Lemon, 475 F.3d 926, 929 (2007).
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A public official, clothed with qualified immunity, is not required to anticipate future
development of constitutional doctrine, but he is required to respect the established
constitutional rights of others. His qualified immunity is not available to him if he does not do
that. Bever v. Gilbertson, 724 F.2d 1083, 1088 (1984).
In an early case in this court (Crocker v. Brown County, 35 Wis. 284), it was said thatpublic officials take their offices cum onere; that is, they take them with all the responsibilities
attached. Forest County v. Poppy, 193 Wis. 274, 213 N.W. 676, 677 (1927).
As already pointed out, the charges made by plaintiffs against the trustee are centered in
the claim that the interests of the trustee conflict with the duties it owes to the beneficiaries. It is
a cardinal rule that the welfare of the cestui que trust is the focal point of every consideration
of duty and loyalty of the trustee. .
Since a trustee is a fiduciary of the highest order and is charged with the utmost fidelity to
his trust, he must refrain from creating situations where his own interests are brought into
conflict with those of the trust, and from doing those things which would tend to interfere withthe exercise of a wholly disinterested and independent judgment. In accepting a trust, the
trustee is presumed to know the obligations and limitations connected with his high office
and, if he transgresses, must abide the consequences.Manchester v. Cleveland Trust Co., 95 Ohio App. 201, 210-211, 114 N.E.2d 242, 247-248 (1953).
B. Punitive Damages
In Lane County v. Wood, 298 Or. 191, 200, 691 P.2d 473, (1984) regarding punitive
damages against public officers: McCormick on Damages sets forth additional sources from
which to glean the meaning of the Restatement comments regarding public officials:Historically, oppressive conduct by public officers was the situation where early judges
were most prone to sanction exemplary damages, and by which they justified and rationalized
the doctrine.
The legal doctrine of punitive damages is founded on the theory that certain intentional
acts should be punished or deterred. Punishment and deterrence concern behavior that society
finds undesirable. Punishment and deterrence are not related to actual or compensatory damages.
Punitive damages are not to compensate an injured party, but to give bad actors a legal
spanking.
The jury in Clackamas County chose to punish the behavior of defendant Wood as a
public officer for official misconduct. It also chose to punish the behavior of Safley for inducing
Wood to breach his official duties. We believe that the acts, as found by the jury-of Wood as a
public servant attempting to make a personal profit from the sale and exchange of public lands in
breach of Wood's fiduciary duty to the citizens who elected him, and of Safley in intentionally
inducing a public official to breach his fiduciary duties - are so egregiously culpable that an
award of nominal damages is sufficient to support the awards of punitive damages against
them. Lane County v. Wood, 298 Or. 191, 203, 691 P.2d 473, (1984).
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V. Individual Respondents Fiduciary Duty To Beneficiaries
Individual Respondents, Public officers, as fiduciaries of the Public Trust, have
fiduciary duties to the beneficiaries of the Public Trust, who are the sovereigns and who are
the Grantors / Beneficiaries of the Public Trust. As fiduciaries of the Public Trust, Public
Officers must at all times, without exception, display honesty, integrity, and good faithtoward the beneficiaries. Fiduciaries have a duty of full disclosure to beneficiaries. To
conceal the fact that corporate statutes do not apply to the people in their private capacity
exercising inherent rights, or to conceal the fact that registration of private property with
the corporate State, such as recording a deed to private land, creates an hypothecation to
the corporate State of the private property which the corporate State then profits
therefrom, such as using the private property as collateral for the issuance of bonds, is
dishonest, bad faith, and breach of fiduciary duty.
These obligations are not mere theoretical concepts or idealistic abstractions of no
practical force and effect; they are obligations imposed by the common law on public officersand assumed by them as a matter of law upon their entering public office. The enforcement of
these obligations is essential to the soundness and efficiency of our government, which exists
for the benefit of the people who are its sovereign. Constitution of 1947, art. I, par. 2. The
citizen is not at the mercy of his servants holding positions of public trust nor is he helpless
to secure relief from their machinations except through the medium of the ballot, the pressure of
public opinion or criminal prosecution. He may secure relief in the civil courts either through
an action brought in his own name. citing:Tube Reducing Corp. v. Unemployment Compensation Commission, 1 N.J. 177, 181, 62 A.2d473, 5 A.L.R.2d 855 (1948); Waszen v. City of Atlantic City, 1 N.J. 272, 276, 63 A.2d 255 (1949);
Haines v. Burlington County Bridge Commission, 1 N.J.Super. 163, 170-173, 63 A.2d 284
(App.Div.1949). Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 476, 86 A.2d 201, (1951).
Nonfeasance, misfeasance, malfeasance and corruption in public office cannot
prevail against an aroused citizenry who have it in their power to end the misconception of
some public officials that their obligations are fully met so long as they obey the letter of the law
and avoid its penal sanctions. That the shortcomings of some public officers may not make them
accountable in our criminal courts does not mean that their nefarious acts cannot successfully be
attacked through the processes of the civil law.Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 476, 86 A.2d 201, (1951).
but the atmosphere of this case prompts us to direct attention to the integritydemanded of those who accept responsibility as public officials. It cannot be too often restated.
The Administration of Government ought to be directed for the good of those who confer and not
of those who receive the trust. The officers of Government are Trustees and both the trust
and trustees are created for the benefit of the people.Rankin v. Board of Educ. of Egg Harbor Tp ., 135 N.J.L. 299, 303, 10 Abbotts 299, 51 A.2d 194,
197.
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Although the general rule is that one party to a transaction has no duty to disclose
material facts to the other, an exception to this rule is made when the parties are in a
fiduciary relationship with each other. Klein v. First Edina National Bank, 293 Minn. 418,
421, 196 N.W.2d 619, 622 (1972). A fiduciary relation exists when confidence is reposed on
one side and there is resulting superiority on the other; and the relation and duties in it need not
be legal but may be moral, social, domestic, or merely personal. Kennedy v. Flo-Tronics, Inc., 274 Minn. at 331, 143 N.W.2d at 830 (quoting Stark v. EquitableLife Assurance Society, 205 Minn. 138, 145, 285 N.W. 466, 470 (1939)). Midland Nat. Bank of
Minneapolis v. Perranoski, 299 N.W.2d 404, 413 (1980).
Every violation by a trustee of a duty required of it by law, whether willful and
fraudulent, or done through negligence, or arising through mere oversight or forgetfulness,
is a breach of trust. (citation omitted). We have often announced the rule that, the burden of
proof is upon a party holding a confidential or fiduciary relation to establish the perfect fairness,
adequacy and equity of a transaction with the party with whom he holds such relation; * * *.
(citation omitted). But where a fiduciary relation exists between the parties to a transaction
the burden of proof of its fairness is upon the fiduciary.Rettinger v. Pierpont, 145 Neb. 161, 197, 15 N.W.2d 393, 412 (1944).
Nondisclosure is tantamount to an affirmative misrepresentation where a party to a
transaction is duty-bound to disclose certain pertinent information (24 N.Y.Jur., Fraud and
Deceit, 107, at 161 [1962] ). Such duty to disclose may arise where a fiduciary or
confidential relationship exists or where a party has superior knowledge not available to the
other (Fraud and Deceit, 106-109, at 159-164 [1962] ).
Even if a case of actual fraud has not been presented for lack of the element of scienter, or actual
awareness on Wein's part that false representations were made, the allegations do establish a
breach of duty actionable as constructive fraud. To recover for constructive fraud, plaintiffneed not prove actual knowledge of falsity, but only that a fiduciary or confidential
relationship existed between herself and Wein
(id.; see, 24 N.Y.Jur., Fraud and Deceit, 2, 17, 109, at 35, 52-53, 163-164 [1962] ).Callahan v. Callahan, 127 A.D.2d 298, 300-301, 514 N.Y.S.2d 819, 821-822 (1987).
It has long been the rule in this state that the trustee has a duty to fully inform the
beneficiary of all material facts so that the beneficiary can protect his own interests where
necessary. St. Paul Fire and Marine Ins. Co. v. Truesdell Distributing Corp. , 207 Neb. 153, 157, 296
N.W.2d 479, 483 (1980).
State ex rel. Nebraska State Bar Ass' n v. Douglas:
[R]espondent was the elected Attorney General of the State of Nebraska. The charge
in count I embodies, in part, an allegation that respondent engaged in conduct which involved
dishonesty, fraud, deceit, or misrepresentation.
Although the general rule is that one party to a transaction has no duty to disclose
material facts to the other, and [sic] exception to this rule is made when the parties are in a
fiduciary relationship with each other.(citations omitted) When a relationship of trust and
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confidence exists, the fiduciary has the duty to disclose to the beneficiary of that trust all
material facts, and failure to do so constitutes fraud. See 37 C.J.S. Fraud 16d (1943).
Regarding the law of trusts and disclosure by a fiduciary, we have said: It is the duty
of a trustee to fully inform the cestui que trust [beneficiary] of all facts relating to the
subject matter of the trust which come to the knowledge of the trustee and which are
material to the cestui que trust to know for the protection of his interests. (Emphasissupplied.) (citations omitted).
Throughout the United States, public officers have been characterized as fiduciaries
and trustees, charged with honesty and fidelity in administration of their office and
execution of their duties. See, (citations omitted). See, also, (citation omitted) (member of
county board; public officials owe a fiduciary duty to the people they represent) ; (citation
omitted) (state land commissioner; The relationship between a state official and the state is that
of principal and agent and trustee and cestui que trust); (citation omitted) (sheriff; A public
office is a public trust. Such offices are created for the benefit of the public, not for the benefit of
the incumbent).
An affirmative statement is not always required, however, and fraud may consist of theomission or concealment of a material fact if accompanied by the intent to deceive under
circumstances which create the opportunity and duty to speak. (citations omitted). See, also,
(citation omitted) (fraud may arise not only from misrepresentation but from concealment as
well, where there is suppression of facts which one party has a legal or equitable obligation to
communicate to another). Concealment means nondisclosure when a party has a duty to
disclose. See (citation omitted). Concealmeans to hide, secrete, or withhold from knowledge of
others.... (citation omitted). See, also, (citations omitted). The word conceal pertains to
affirmative action likely to prevent or intended to prevent knowledge of a fact.... State v.
Copple, supra.
It is a general principle in the law of fraud that where there is a duty to speak, thedisclosure must be full and complete. It is firmly established that a partial and fragmentary
disclosure, accompanied with the wilful concealment of material and qualifying facts, is not
a true statement, and is as much a fraud as an actual misrepresentation, which, in effect, it
is. Telling half a truth has been declared to be equivalent to concealing the other half. Even
though one is under no obligation to speak as to a matter, if he undertakes to do so, either
voluntarily or in response to inquiries, he is bound not only to state truly what he tells, but
also not to suppress or conceal any facts within his knowledge which will materially qualify
those stated. If he speaks at all, he must make a full and fair disclosure. Therefore, if one
wilfully conceals and suppresses such facts and thereby leads the other party to believe that
the matters to which the statements made relate are different from what they actually are,he is guilty of a fraudulent concealment. 37 Am.Jur.2d Fraud and Deceit 151 at 208-09
(1968).
Moreover, where one has a duty to speak, but deliberately remains silent, his silence
is equivalent to a false representation.See, Security St. Bk. of Howard Lake v. Dieltz, 408 N.W.2d 186 (Minn.App.1987); Callahan v.Callahan, 127 A.D.2d 298, 514 N.Y.S.2d 819 (1987); Holcomb v. Zinke, 365 N.W.2d 507
(N.D.1985); Anderson v. Anderson, 620 S.W.2d 815 (Tex.Civ.App.1981); 37 C.J.S. Fraud 16a
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(1943).
In passing upon the propriety of action by a commission council, the Supreme Court of
Louisiana, in (citation omitted), stated: Public officials occupy positions of public trust....
The duty imposed on a fiduciary embraces the obligation to render a full and fair
disclosure to the beneficiary of all facts which materially affect his rights and interests.
As expressed in (citation omitted): A public official is a fiduciary toward the public... and if he deliberately conceals material information from them he is guilty of fraud.
To reveal some information on a subject triggers the duty to reveal all known material
facts. (citations omitted): As expressed in 37 Am.Jur.2d, supra, 150 at 207-08: A party of
whom inquiry is made concerning the facts involved in a transaction must not, according to
well-settled principles, conceal or fail to disclose any pertinent or material information in
replying thereto, or he will be chargeable with fraud. The reason for the rule is simple and
precise. Where one responds to an inquiry, it is his duty to impart correct information. Thus,
one who responds to an inquiry is guilty of fraud if he denies all knowledge of a fact which
he knows to exist; if he gives equivocal, evasive, or misleading answers calculated to convey
a false impression, even though they are literally true as far as they go; or if he fails todisclose the whole truth.State ex rel. Nebraska State Bar Ass'n v. Douglas , 227 Neb. 1, 23-26, 416 N.W.2d 515, 529-531, (1987)
End of citations from: State ex r el. N ebraska State Bar Ass' n v. Douglas.
Incident to said trust [A public office is a public trust]: They stand in a fiduciary
relationship to the people (by) whom they have been elected and appointed to serve. (citation
omitted) The relationship between a state official and the State is that of principal and agent and
trustee and cestui que trust. The relationship has been described as founded in the common
law. (citations omitted) These obligations are not mere theoretical concepts or idealistic
abstractions of no practical force and effect; they are obligations imposed by the common
law on public officers and assumed by them as a matter of law upon their entering public
office. (citation omitted). Fuchs v. Bidwill, 31 Ill.App.3d 567, 570, 334 N.E.2d 117, 120 (1975).
As duly elected public officials serving their constituencies in Plaquemines Parish, Judge
Perez, Leander Perez, Jr., and Chalin Perez were bound to exercise their official functions with
the utmost degree of honesty and fidelity. Public officials occupy positions of public trust.
Public offices are created for the purpose of effecting the ends for which government has been
instituted, which are the protection, safety, prosperity, and happiness of the people; and not
the profit, honor, or private interest of any one man, family, or class of men. And, of course, we
subscribe to the principle that a public officer owes an undivided duty to the public whom he
serves and is not permitted to place himself in a position that will subject him to conflictingduties or cause him to act other than for the best interests of the public.
Commenting on the high duty of trust and fidelity owed by public officials, the United States
Supreme Court has noted: Law enforcement officials have furthermore been held to a higher
responsibility than mere compliance with the law.
A fiduciary relationship has been further described as one that exists when confidence is
reposed on one side and there is resulting superiority and influence on the other.
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The duty imposed on a fiduciary embraces the obligation to render a full and fair
disclosure to the beneficiary of all facts which materially affect his rights and interests.Plaquemines Parish Com'n Council v. Delta Development Co., Inc., 502 So.2d 1034, 1039-1040 (1987).
The duty of a fiduciary embraces the obligation to render a full and fair disclosure to
the beneficiary of all facts which materially affect his rights and interests. Where there is a dutyto disclose, the disclosure must be full and complete, and any material concealment or
misrepresentation will amount to fraud.
Cases in which the defendant stands in a fiduciary relationship to the plaintiff are frequently
treated as if they involved fraudulent concealment of the cause of action by the defendant. The
theory is that although the defendant makes no active misrepresentation, this element is supplied
by an affirmative obligation to make full disclosure, and the non-disclosure itself is a fraud.Neel v. Magana, Olney, Levy, Cathcart & Gelfand, 6 Cal.3d 176, 189, 491 P.2d 421, 429 (1971).
(Syllabus by the Court.)
Steinbeck v. Bon Homme Min. Co.:One who occupies a fiduciary relation to another in respect to business or property, and
who by the use of the knowledge he obtains through that relation, or by the betrayal of the
confidence reposed in him under it, acquires a title or interest in the subject-matter of the
transaction antagonistic to that of his correlate, thereby charges his title or interest with a
constructive trust for the benefit of the latter, which the cestui que trust may enforce or
renounce at his option.
The test of such a trust is the fiduciary relation and a betrayal of the confidence
reposed, or some breach of the duty imposed under it.Steinbeck v. Bon Homme Min. Co., 152 F. 333, 334, 81 C.C.A. 441 (1907).
Tr ice v. Comstock:
Syllabus by the Court. [A case exemplifying non-disclosure by public officers fiduciaries of
the Public Trust of the presumptive hypothecation of the beneficiarys private property
to the corporate State resulting from registration or recordation of said property with the
State with benefits and profits to the State and injury to the beneficiary.]
Wherever one person is placed in such a relation to another by the act or consent of that
other, or by the act of a third person, or of the law, that he becomes interested for him, or
interested with him, in any subject of property or business, he is in such a fiduciary relation
with him that he is prohibited from acquiring rights in that subject antagonistic to the
person with whose interests he has become associated.
A violation of this inhibition, and the acquisition by one of the parties, by means ofinterest or information acquired through the fiduciary relation of any property or interest, which
prevents or hinders his correlate in accomplishing the object of the agency, charges the
property thus acquired with a constructive trust for the benefit of the latter , which may be
enforced or renounced by him, at his option.
The test of such a trust is the fiduciary relation, and a betrayal of the confidence
imposed under it to acquire the property. Neither a legal nor equitable interest by either party,
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during the relation, in the property subsequently acquired, nor authority in either to buy or sell it,
nor damage to the party betrayed, nor the existence of the fiduciary relation at the time the
confidence is abused, is indispensable to the existence and enforcement of the trust. The
existence of the relation, and a subsequent abuse of the confidence bestowed under it for the
purpose of acquiring the property, are alone sufficient to authorize the enforcement of the trust.
For reasons of public policy, founded in a profound knowledge of the human intellect andof the motives that inspire the actions of men, the law peremptorily forbids every one who, in
a fiduciary relation, has acquired information concerning or interest in the business or
property of his correlate from using that knowledge or interest to prevent the latter from
accomplishing the purpose of the relation. If one ignores or violates this prohibition, the law
charges the interest or the property which he acquires in this way with a trust for the benefit of
the other party to the relation, at the option of the latter, while it denies to the former all
commission or compensation for his services. This inexorable principle of the law is not based
upon, nor conditioned by, the respective interests or powers of the parties to the relation, the
times when that relation commences or terminates, or the injury or damage which the betrayal of
the confidence given entails. It rests upon a broader foundation, upon that sagacious publicpolicy which, for the purpose of removing all temptation, removes all possibility that a trustee
may derive profit from the subject-matter of his trust, so that one whose confidence has been
betrayed may enforce the trust which arises under this rule of law although he has sustained
no damage, although the confidential relation has terminated before the trust was betrayed,
although he had no legal or equitable interest in the property, and although his correlate who
acquired it had no joint interest in or discretionary power over it. The only indispensable
elements of a good cause of action to enforce such a trust are the fiduciary relation and the
use by one of the parties to it of the knowledge or the interest he acquired through it to
prevent the other from accomplishing the purpose of the relation.
And, within the prohibition of this rule of law, every relation in which the duty offidelity to each other is imposed upon the parties by the established rules of law is a relation of
trust and confidence. The relation of trustee and cestui que trust, principal and agent, client
and attorney, employer and an employee, who through the employment gains either an interest in
or a knowledge of the property or business of his master, are striking and familiar illustrations of
the relation. From the agreement which underlies and conditions these fiduciary relations, the
law both implies a contract and imposes a duty that the servant shall be faithful to his master,
the attorney to his client, the agent to his principal, the trustee to his cestui que trust, that each
shall work and act with an eye single to the interest of his correlate, and that no one of them shall
use the interest or knowledge which he acquires through the relation so as to defeat or hinder the
other party to it in accomplishing any of the purposes for which it was created. But no interest or control of the property to which the agency relates is essential to the
raising of the trust. The fiduciary relation and a breach of the duty it imposes are sufficient
in themselves. .
The truth is that the principle of law which controls the determination of this case is not
limited or conditioned by the interests, powers, or injuries of the parties to the fiduciary relations.
It is as broad, general, and universal as the relations themselves, and it charges everything
acquired by the use of knowledge secured by virtue of these trust relations and in violation of the
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duty of fidelity imposed thereby with a constructive trust for the benefit of the party whose
confidence is betrayed. It dominates and controls the relation of attorney and client, principal
and agent, employer and trusted employe, as completely as the relation of trustee and cestui que
trust. In Greenlaw v. King, 5 Jur. 19, Lord Chancellor Cottenham, speaking of this doctrine,
says: The rule was one of universal application, affecting all persons who came within its
principle, which was that no party could be permitted to purchase an interest when he had a dutyto perform which was inconsistent with the character of a purchaser. In Hamilton v. Wright, 9
Cl. & Fi. 111, 122, Lord Brougham declared that it is the duty of a trustee to do nothing for the
impairing or destruction of the trust, nor to place himself in a position inconsistent with the
interests of the trust. And on page 124 he said: Nor is it only on account of the conflict between
his interest and his duty to the trust that such transactions are forbidden. The knowledge which
he acquires as trustee is of itself sufficient ground of disqualification, and of requiring that such
knowledge shall not be capable of being used for his own benefit to injure the trust. The rule
upon this subject was clearly and not too broadly stated in the American note to Keech v.
Sandford, 1 White & T. Lead. Case. in Eq. (4th Am. Ed.) p. 62, *page 58, in these words:
Wherever one person is placed in such relation to another, by the act or consent of that
other, or the act of a third person, or of the law, that he becomes interested for him, orinterested with him, in any subject of property or business, he is prohibited from acquiring
rights in that subject antagonistic to the person with whose interests he has become
associated. Trice v. Comstock, 61 L.R.A. 176, 121 F. 620, 620-627. 57 C.C.A. 646 (1903).
VI. Taking of private property for public use without just compensation
Private property may not be taken for public use without just compensation. As
soon as private property has been taken, whether through formal condemnation
proceedings, occupancy, physical invasion, or regulation, the landowner has already
suffered a constitutional violation, and the self-executing character of the constitutionalprovision with respect to compensation is triggered. When public officers take private
property without just compensation they are acting in violation of both federal and state
Constitutional limitations, they are acting outside their delegated authority, they are acting
in breach of their fiduciary duty, and, they are acting outside the scope of the limitations
placed upon the entity for whom they are acting, therefore with respect to the entity for
whom they are acting, such as a municipal corporation or government corporation, their
acts are ultra vires.
The Fifth Article in Amendment to the Constitution of the United States of America
states, in pertinent part: Nor shall private property be taken for public use without justcompensation. The Constitution of the United States of America, Article in Amendment the Fifth.
Article I (Declaration of Rights) of the Constitution of The state of Wisconsin states:
Private property for public use. Section 13. The property of no person shall be taken for
public use without just compensation therefor.The Constitution for The state of Wisconsin, Article I. Declaration of Rights.
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Private property. As protected from being taken for public uses, is such property as
belongs absolutely to an individual, and of which he has the exclusive right of disposition;
property of a specific, fixed and tangible nature, capable of being had in possession and
transmitted to another, such as houses, lands, and chattels. Homochitto River Comrs v. Withers,
29 Miss, 21, 64 Am.Dec. 126, Scranton v. Wheeler, 21 S.Ct. 48, 179 U.S. 141, 45 L.Ed. 126.
Blacks Law Dictionary, Revised Fourth Edition, page 1382.
We hold that under the facts alleged the plaintiff has stated a claim for relief underArt. I,
sec. 13 of the Wisconsin Constitution. [I]n order to trigger the just compensation clause
there must be a taking of private property for public use. A taking in the constitutional sense
occurs when the government restriction placed on the property practically or substantially
renders the property useless for all reasonable purposes. Howell Plaza, Inc. v. State Highway
Comm., 92 Wis.2d 74, 85, 284 N.W.2d 887 (1979), quoting Buhler v. Racine County, 33 Wis.2d 137,
143, 146 N.W.2d 403 (1966). A taking can occur short of actual occupation by the government
if the restriction deprives the owner of all, or substantially all, of the beneficial use of his
property. Howell Plaza, Inc. v. State Highway Comm., 66 Wis.2d 720, 726, 226 N.W.2d 185 (1975).However, [a] taking can occur absent physical invasion only where there is a legally imposed
restriction upon the property's use. Howell Plaza, 92 Wis.2d at 88, 284 N.W.2d 887.Zinn v. State, 112 Wis.2d 417, 424, 334 N.W.2d 67, 70-71 (1983).
Because the DNR's ruling, which was within its statutory authority to make, converted
Zinn's private property by operation of law into public lands, there can be no dispute that there
was a taking within the meaning of Art. I, sec. 13. Contrary to the holding of the court of
appeals, we find that this ruling which transferred title to Zinn's land to the state constituted a
legally imposed restriction on Zinn's property under this court's decision in Howell Plaza (1979).
It is difficult to conceive of a greater restriction on the property, in the absence of actual
physical occupancy, than the loss of title to private land. Zinn, 112 Wis2d at 427.
The language of the Fifth Amendment prohibits the tak[ing] of private property for
public use without payment of just compensation. As soon as private property has been
taken, whether through formal condemnation proceedings, occupancy, physical invasion, or
regulation, the landowner has already suffered a constitutional violation, and the self-
executing character of the constitutional provision with respect to compensation, United
States v. Clarke, 445 U.S. 253, 257, 100 S.Ct. 1127, 1130, 63 L.Ed.2d 373 (1980), quoting 6 J.
Sackman, Nichols' Law of Eminent Domain Sec. 25.41 (rev. 3d ed. 1980), is triggered. This
Court has consistently recognized that the just compensation requirement in the Fifth
Amendment is not precatory: once there is a taking, compensation mustbe awarded .....Zinn, 112 Wis2d at 429.
This case involves an action against the state to receive the just compensation that is
constitutionally mandated whenever private property is taken for public use. Once property is
taken in the constitutional sense, just compensation is constitutionally required.Zinn, 112 Wis2d at 431.
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However, sovereign immunity will not bar recovery for a taking, because just
compensation following a taking is a constitutional necessity rather than a legislative
dole. In this sense, Article I, 13 is a self-executing constitutional waiver of sovereign
immunity. We therefore determine that sovereign immunity does not bar the plaintiffs' claims
under Article I, 13. (citations omitted)
Wisconsin Retired Teachers Ass'n, Inc. v. Employe Trust Funds Bd., 207 Wis.2d 1, 28, 558N.W.2d 83, 95 (1997).
The takings clause is a self-executing constitutional provision.Wisconsin Retired Teachers, 207 Wis.2d at 29.
It is the property owner's loss that Wis. Const. art. I, 13 compensates.Wisconsin Retired Teachers, 207 Wis.2d at 30.
VII. Unjust enrichment and Imposition of a constructive trust
When public officers who are fiduciaries of the Public Trust take private property
for public use without just compensation in violation of the Constitutions creating the
Public Trust(s) and in breach of their fiduciary duty, said public officers unjustly enrich
the entity for whom they have acted, thereby giving rise to a constructive trust in favor of,
and for the benefit of, the one whose interest has been taken, and against the entity that has
been unjustly enriched.
A constructive trust arises where a person clothed with some fiduciary character, by
fraud or other action upon his part, gains something for himself [or another] which, except for his
act, he would not have procured and which it is inequitable for him, [or the third party, employeror otherwise,] to retain. If one obtains property by such arts, acts, or circumstances of
circumvention, imposition, or fraud or by virtue of a confidential relationship and
influence under such circumstances that he ought not, according to the rules of equity and
good conscience, hold and enjoy the beneficial interest, the court, in order to achieve
complete equity, will declare a trust by construction and convert the offending party into a
trustee and order him to hold the same subject to a lien or direct him to execute the trust so
as to protect fully the rights of the defrauded or deceived party. (Perry on Trusts (6th Ed.)
Sec. 166, citations omitted) Courts of equity declare trusts of this character and recognize
equitable liens because of what they deem fraud, either actual or constructive, including acts or
omissions in violation of fiduciary obligations. The constructive trust may be one resultingfrom actual fraud or one in which the existence of confidential relation and subsequent abuse
of the confidence reposed produce a result abhorrent to equity.Continental Illinois Nat. Bank & Trust Co. v. Continental Illinois Nat. Bank, 87 F.2d 934, 936(1937).
Restatement, Restitution, 1 [1937 - 2011] provides: Where a person holding title to
property is subject to an equitable duty to convey it to another on the ground that he would be
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unjustly enriched if he were permitted to retain it, a constructive trust arises. A constructive
trust does not, like an express trust, arise because of a manifestation of an intention to create it,
but it is imposed as a remedy to prevent unjust enrichment. A constructive trust, unlike an
express trust, is not a fiduciary relation, although the circumstances which give rise to a
constructive trust may or may not involve a fiduciary relation. a quasi-contractual obligation
and a constructive trust closely resemble each other, the chief difference being that the plaintiffin bringing an action to enforce a quasi-contractual obligation seeks to obtain a judgment
imposing a merely personal liability upon the defendant to pay a sum of money, whereas the
plaintiff in bringing a suit to enforce a constructive trust seeks to recover specific property.
This court has stated that a constructive trust is an implied trust, arising by operation of
law to satisfy the demands of justice. Hall v. Superior Federal Bank, 303 Ark. 125, 794 S.W.2d 611
(1990). While a confidential or fiduciary relationship does not in itself give rise to a constructive
trust, an abuse of confidence rendering the acquisition or retention of property by one
person unconscionable against the other, suffices generally to ground equitable relief in the
form of declaration and enforcement of a constructive trust. Id.,
J.W. Reynolds Lumber Co. v. Smackover State Bank, 310 Ark. 342, 346-347, 836 S.W.2d 853, 20UCC Rep.Serv.2d 542 (1992).
In 3 Pomeroy, Equity Jurisprudence (4th Ed.) pp. 2397-2401, it is said:
A constructive trust arises whenever another' s property has been wrongfully
appropriated and converted into a different form. If one person having money or any kind of
property belonging to another in his hands wrongfully uses it for the purchase of lands, taking
the title in his own name, or if a trustee or other fiduciary person wrongfully converts the trust
fund into a different species of property, taking to himself the title; or if an agent or bailee
wrongfully disposes of his principal's securities, and with the proceeds purchases other securities
in his own name, in these and all similar cases equity impresses a constructive trust upon the
new form or species of property, not only while it is in the hands of the original wrongdoer, but
as long as it can be followed and identified in whosesoever hands it may come, except into those
of a bona fide purchaser for value and without notice; and the court wil l enforce the
constructive trust for the benefit of the beneficial owner or original cestui que trust who has
thus been defrauded. As a necessary consequence of this doctrine, whenever property subject to
a trust is wrongfully sold and transferred to a bona fide purchaser, so that it is freed from the
trust, the trust immediately attaches to the price or proceeds in the hands of the vendor, whether
such price be a debt yet unpaid due from the purchaser, or a different kind of property taken in
exchange, or even a sum of money paid to the vendor, as long as the money can be identified and
reached in his hands or under his control. It is not essential for the application of this doctrine
that an actual trust or fiduciary relation should exist between the original wrongdoer and the
beneficial owner. Whereever one person has wrongfully taken the property of another, and
converted it into a new form, or transferred it, the trust arises and follows the property or its
proceeds. (Italics ours.)It appears to us that the foregoing quotation from Pomeroy not only constitutes good logic, but
sound law. The court rightly declared a lien upon the property for the amount of the trust fund
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actually used either in the purchase or in the improvement of the property. 2 Perry on Trusts (5th
Ed.) p. 528. Warsco v. Oshkosh Savings & Trust Co., 190 Wis. 87, 208 N.W. 886, 887 (1926).
Fu chs v. Bidwill:
Since 1871, Illinois has had a statute defining the fiduciary nature of public office.
(Ill.Rev.Stat.1971, ch. 102, par. 3.) As amended in 1949, it provides: We conclude that theGovernmental Ethics Act, effective January 1, 1968, does not create a new obligation but
states more explicitly the fiduciary status of a public official which equity has long asserted.
No person holding any office, either by election or appointment under the laws or
constitution of this state, may be in any manner interested, either directly or indirectly, in his
own name or in the name of any other person, association, trust or corporation, in any
contract or the performance of any work in the making or letting of which such officer may be
called upon to act or vote. * * * Nor may any such officer take or receive, or offer to take or
receive, Either directly or indirectly, any money or other thing of value as a gift or bribe or
means of influencing his vote or action in his official character. * * * (Emphasis supplied)
The principles of equity related to fiduciary liability do not require the discovery ofactual harm or measurable injury to the public. The Restatement of Restitution, s 197, provides
that a fiduciary who received profit in violation of his duty: (H)olds what he receives upon a
constructive trust for the beneficiary.
Comment c explains: The rule stated in this Section is applicable although the profit
received by the fiduciary is not at the expense of the beneficiary. * * * The rule stated in this
Section, like those stated in the other Sections in this Chapter, is not based on harm done to the
beneficiary in the particular case, but rests upon a broad principle of preventing a conflict of
opposing interests in the minds of fiduciaries, whose duty it is to act solely for the benefit of
their beneficiaries.Fuchs v. Bidwill, 31 Ill.App.3d 567, 571-572, 334 N.E.2d 117, 120 (1975) (citation omitted)
We believe that the amended complaint adequately pleads the existence of a fiduciary
relationship, the subsequent breach thereof, and sufficient facts, if proven, to justify the
imposition of a constructive trust. Even if we were to find that the pleading lacked specific
allegations of fraud and the breach of a fiduciary duty, the imposition of a constructive trust
nonetheless would still be proper. The particular circumstances in which equity will impress
a constructive trust are as numerous as the modes by which property may be obtained through
bad faith and unconscionable acts. (County of Cook v. Barrett ; 4 Pomeroy's Equity
Jurisprudence s 1045, at 97 (5th ed. 1941).) A constructive trust is imposed by a court because
the person holding title to property would profit by a wrong or would be unjustly enriched if he
were permitted to keep the property.
To impose a constructive trust, no fiduciary duty or relationship need exist between the
person holding the property and the aggrieved party. Restitution, by virtue of its adaptability to
individual cases on equitable principles may * * * reach situations beyond the grasp of other civil
or criminal remedies and do justice on equitable principles * * *. (Citation.)Village of Wheeling v. Stavros, 411 N.E.2d 1067, 1070 (1980).
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Ross v. Specialt y Risk Consul tants, I nc.:
13 . A constructive trust arises whenever another's property has been wrongfully
appropriated and converted into a different form. Warsco v. Oshkosh Savings & Trust Co., 190 Wis.
87, 90, 208 N.W. 886 (1926) (quoting 3 POMEROY, EQUITY JURISPRUDENCE 1051, at 2397-2401
(4th ed.1918)). It is an equitable device employed to prevent fraud or abuse of a confidentialrelationship and is implied to accomplish justice. See In re Massouras' Estate, 16 Wis.2d 304, 312,
114 N.W.2d 449 (1962).
14 In the constructive trust case, the defendant has legal rights in something that in good
conscience belongs to the plaintiff. 1 DAN B. DOBBS, LAW OF REMEDIES 4.3(1), at 587-
88 (2d ed.1993). The property is subject to a constructive trust, and the defendant is a
constructive trustee. Id. The defendant is thus made to transfer title to the plaintiff who is, in
the eyes of equity, the true owner. Id. When equity imposes a constructive trust upon an
asset of the defendant, the plaintiff ultimately gets formal legal title. Id. at 4.3(2), at 589.
15 A constructive trust will be imposed only in limited circumstances. Legal title must
have been obtained by means of fraud, commission of wrong or by any form ofunconscionable conduct and must be held by someone who in equity should not be entitled to
it. See Wilharms v. Wilharms, 93 Wis.2d 671, 678-79, 287 N.W.2d 779 (1980). It is not necessary that
the person against whom the constructive trust is to be imposed be the wrongdoer or know of
wrongdoing initially. If other elements for imposing a constructive trust have been satisfied and
the holder of legal title is not a bona fide purchaser, a constructive trust may be imposed. See
id.
16 A constructive trust imposed on wrongfully obtained property follows the property
or its proceeds.
If one person having money or any kind of property belonging to another in his hands
wrongfully uses it for the purchase of lands, taking the title in his own name, ... equityimpresses a constructive trust upon the new form or species of property, not only while it is in
the hands of the original wrongdoer, but as long as it can be followed and identified in
whosesoever hands it may come, except into those of a bona fide purchaser for value and
without notice; and the court will enforce the constructive trust for the benefit of the beneficial
owner or original cestui que trust who has thus been defrauded. ... Wherever one person has
wrongfully taken the property of another, and converted it into a new form, or transferred it, the
trust arises and follows the property or its proceeds.
Warsco, 190 Wis. at 90, 208 N.W. 886; see also Truelsch v. Northwestern Mut. Life Ins. Co.,
186 Wis. 239, 202 N.W. 352 (1925).FN7
FN7. In Truelsch v. Northwestern Mut. Life Ins. Co., 186 Wis. 239, 252, 202 N.W. 352(1925):
It would be a signal failure of justice if one who has become a constructive trustee by
reason of wrongfully receiving or securing the property of another could escape the
consequences of his acts by changing the form of the property thus acquired. Hence, as
between him and the cestui que trust, the latter may pursue the funds into the new
investment and charge that investment with the trust. He may also assert and enforce
the same right against third parties to whom the property has been transferred with
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knowledge of the trust or who have paid no consideration for it, provided the identity of
the trust fund can be established.
17 An interest in land comprehends every kind of claim to land which can form the
basis of a property right. Weber v. Sunset Ridge, 269 Wis. 120, 126, 68 N.W.2d 706 (1955)
(citations omitted). An action seeking the imposition of a constructive trust may ultimately
change legal title. See DOBBS, supra, at 587-88. It follows, therefore, that a claim for theimposition of a constructive trust on real estate is an action seeking relief that might confirm or
change interests in the real property, as that term is used in WIS. STAT. 840.10.
21 That the suit for the constructive trust was filed in Illinois and not Wisconsin is of
no consequence. A court outside this state having personal jurisdiction of a party may
order that party to execute a conveyance of real property located in Wisconsin. Belleville
State Bank, 117 Wis.2d at 577, 345 N.W.2d 405. To be consistent with Belleville, we must
conclude WIS. STAT. 840.10 permits a lis pendens to be recorded in connection with an out-
of-state suit seeking title or possession of property in Wisconsin by means of a constructive trust.
END: Ross v. Specialty Risk Consult ants, I nc., 240 Wis.2d 23, 621 N.W.2d 669, (2000).
In re Massouras' Estate:
The facts in this case call for the imposition of a constructive trust. Such a trust is
implied by operation of law as a remedial device for the protection of a beneficial interest
against one who either by actual or constructive fraud, duress, abuse of confidence,
mistake, commission of a wrong, or by any form of unconscionable conduct, has either
obtained or holds the legal title to property which he ought not in equity and in good
conscience beneficially enjoy. Joerres v. Koscielniak (1961), 13 Wis.2d 242, 108 N.W.2d 569;
Zartner v. Holzhauer (1931), 204 Wis. 18, 234 N.W. 508, 76 A.L.R. 396; Warsco v. Oshkosh S. & T. Co.
(1926), 190 Wis. 87, 208 N.W. 886, 47 A.L.R. 366; Bogart, The Law of Trusts and Trustees, 2d ed., ch.
24, pages 3-10, sec. 471; Davitt, The Elements of Law, Ch. 18, Equity, p. 305; 54 Am.Jur., Trust, p. 167,sec. 218; 89 C.J.S. Trusts 139, p. 1015.
It was pointed out in Masino v. Sechrest (1954), 268 Wis. 101, 66 N.W.2d 740, and in
Nehls v. Meyer (1959), 7 Wis.2d 37, 95 N.W.2d 780, that a constructive trust is a device in a
court of equity to prevent unjust enrichment which arises from fraud or abuse of
confidential relationship and is implied to accomplish justice. In those cases,